Bitcoin bull rally over? BTC sell-off trend continues after initial ETF pump - CryptoCrazeNews

Bitcoin bull rally over? BTC sell-off trend continues after initial ETF pump

Bitcoin correction post SEC approval, What lies ahead for investors?

Bitcoin bull rally over? BTC sell-off trend continues after initial ETF pump

Bitcoin (BTC), the largest digital asset, recorded one of the major pullbacks in about a month. This comes in as the excitement surrounding the new US exchange-traded funds (ETFs) for BTC subsided. After a surge following the ETFs’ debut, Bitcoin posted three consecutive days of losses through Sunday. It eventually marked its longest losing streak since mid-December. Bitcoin price dropped by around 3% in the last 7 days.

ETF fails to keep Bitcoin up

The batch of nearly a dozen ETFs, including offerings from major investment firms like BlackRock Inc. and Fidelity Investments, began trading on January 11. Bitcoin briefly surged to a two-year high above $49,000 after the ETFs went live. However, more price correction is still in the scope.

According to a report, Market analysts noted that the pattern of a “buy-the-rumor, sell-the-fact reaction” was evident in Bitcoin’s recent performance. Tony Sycamore, a market analyst at IG Australia Pty, suggested a possible slide to $38,000 to $40,000 based on chart patterns for Bitcoin.

Eric Balchunas, Bloomberg Intelligence’s senior ETF analyst, reported on social media site X that the new U.S. spot funds attracted a net inflow of $819 million over the first two days of trading. Notably, BlackRock’s iShares Bitcoin Trust received $500 million, and Fidelity’s Wise Origin Bitcoin Fund saw $422 million in inflows. On the other hand, the $26 billion Grayscale Bitcoin Trust, the largest fund of its kind, experienced $579 million in outflows after converting into an ETF last week.

The shift from a closed-ended structure to an ETF format led to the narrowing of the discount to its underlying holdings, prompting some to profit from the trade. Speculators capitalizing on this move could be contributing to Bitcoin’s recent weakness, according to analysts.

What’s next for crypto gold?

Noelle Acheson, the author of the Crypto Is Macro Now newsletter, suggested that despite outflows from the Grayscale Bitcoin Trust, the new funds were likely to continue seeing strong inflows in the coming week. Money on the sidelines could flow into these funds, driven by marketing efforts. However, short-term outflows might occur as speculative positions unwind.

Bitcoin’s decline to $42,600 since the US spot ETF debut could be indicative of a “sell-the-fact” price action. Analysts highlighted a potential continuation of the sell-off in the near term, citing Bitcoin’s RSI divergence signaling a correction. 

The pullback might find support near the dynamic level of $38,000, according to 10x Research’s analysis of price patterns and technical indicators. A bearish divergence occurred as prices reached new extremes while momentum indicators like the RSI failed to confirm, hinting at potential upside exhaustion.

Leave a Reply

Your email address will not be published. Required fields are marked *